Shelley Greer: Contract Milking Agreements — have you covered everything?

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At this time of year a number of farm owners and contract milkers are in the process of negotiating and entering into Contract Milking Agreements.

At Gallie Miles we see a number of disputes arise each year in relation to the terms of these agreements.

In many cases those disputes could have been avoided if the parties had ensured that the Contract Milking Agreement (CMA) that they entered into accurately reflected what they had agreed between themselves and their expectations for the coming season.

Here are some tips for both farm owners and contract milkers to avoid a dispute in relation to their CMA.

1. Many farm owners use the Federated Farmers New Zealand Contract Milking Agreement. This is a comprehensive agreement. If you are presented, or intend to use, another form of agreement, ensure that it covers everything and that you get advice if you do not understand any of its terms.

2. Ensure that you have named the parties to the CMA correctly.

If a company or trust owns the farm, ensure that the company or trust name is correct and identified as the farm owner.

3. Ensure that you fill in all of the relevant fields, for example, the amount of fertiliser that will be applied.

Do not leave fields in the CMA blank that should be completed, otherwise you will not be able to enforce that term if a dispute arises.

4. Ensure that the description of the land in the CMA encompasses all blocks of land that the contract milker will work on.

5. When providing warranties as to past production, check the Fonterra figures to ensure that these are correctly recorded in the CMA.

A failure to do this may amount to a breach of warranty and entitle the contract milker to make a claim against the farm owner.

6. Ensure that the annual estimated production is realistic.

While there are many factors that influence the production that can be achieved in a season, if an estimate is entirely unrealistic and without proper basis, the contract milker may make a claim against the farm owner for misrepresentation.

7. If you are contract milker, inspect the farm thoroughly, including all blocks, races, water supply, and cow sheds, before you enter into the CMA.

If you have any queries, ensure these are raised with the farm owner before signing.

8. If you are a farm owner, ensure you comply with the minimum and maximum cow numbers you have recorded in the CMA.

9. Once the CMA is signed, check that you have fulfilled all of your obligations under the CMA prior to the season getting underway. For farm owners this includes providing the contract milker with copies of the farm health and safety policy, a plan of the farm, records of soil tests, water use records and any resource consents or conditions.